Deceleration is Expected in Outsourcing in 2013

Morgan Stanley recently announced that in 2013 the outsourcing industry is likely to slow down. Although the revenue outlook looks a little depressing for companies offering offshore data management and technical support services, it might as well be good news for companies looking for partners. The higher competition would mean a better service and lower price. Some firms can take advantage of the global slowdown and gain competitive advantage on their market through outsourcing at the right price.

Change in Consumer Confidence

The slowdown of the outsourcing industry is likely to be originating from the Euro Zone. As the future of the currency is still not clear, it is likely that companies will put off expansions and investments in 2013. However, as the budget of Euro zone firms will be tight and the political uncertainty would rise, this can result in more actions towards cost-cutting, including moving operations abroad.

IT Operations are the Future

Hindu Business Online confirmed that outsourcing in India has a bright future in 2013. This is due to the improvements made in technology and the fast movement towards data digitalization all over the world. Although some experts have denied the claims and stated that the global economy would have a greater effect on the industry, some optimistic analysts still hold on to their opinion that the most evident decision of companies when cutting costs is outsourcing to India, Pakistan and the Philippines.

Cloud Storage Builds More Confidence in 2013

The bright side is that as cloud storage applications are improving rapidly, the safety of data would also increase. That would create more trust in the industry among companies who are looking for outsourcing partners abroad. Data transfer has always been a source of security threat, and once companies are able to manage their own cloud storage and have instant access to user data the confidence would increase. The encryption of data while transferring is likely to become safer in 2013.

Inflation in Third World Countries

One of the reasons for the deceleration of outsourcing is the high inflation rate in many countries. As the industries and economies are improving, this effect is unavoidable. The instability of the currencies and the higher living standards of the population might result in increased cost of outsourcing to these countries. Until there are securities provided by the governments, the confidence of the global market might remain low. As there are more people finding work outside agencies in Asia, the pool of talent might become smaller and prices might increase.

National Interests in Politics and in Business

From America to European governments, there are many politicians promoting national values and supporting companies in creating jobs within their own country. Depending on the incentives and tax rebates provided for multinational firms, this might be a reason for the shift to home production and employment opportunities instead of outsourcing. The reputation of companies in many cases depends on their contribution towards the growth of the national economy, and we need to consider this as an influencing factor, too.

– BackOffice Pro